The second quarter of 2013 has shown positive signs of a return to more stable transactional activity following several years of volatility. Renewed confidence in offshore transactions and an increase in deals between Q1 and Q2 2013 have been highlighted in the latest Offshore-i Report released today by Appleby, one of the world’s leading providers of offshore legal, fiduciary and administration services.
The latest edition of Appleby‘s quarterly report, which provides data and insight on merger and acquisition activity in major offshore financial centres, focuses on Q2 of 2013 and shows that the Crown Dependencies enjoyed a positive quarter. Whilst deal volumes in the Isle of Man were down from 20 to 18 compared to Q1 2013, the value of the deals was considerabley higher, up 46% from USD194m to USD283m on the previous quarter.
Offshore M&A activity in the second quarter of 2013 presents a relatively positive picture, with both the number of deals completed and their value remaining broadly consistent compared with Q1. This suggests that there may be some stabilisation of transactional activity levels after the volatility of the last few years.
Commenting on the report, Nick Verardi, Head of Corporate and Commercial at Appleby (Isle of Man) LLC said: “The numbers speak for themselves, but I am in no doubt that the Isle of Man market is in a more positive mood in line with our other offshore jurisdictions. Isle of Man companies were the target of nine deals in Q2 with an aggregate deal value of USD449m, and we believe this indicates stability and confidence returning to the market.”
He continued:”The number of deals has started to form a pattern averaging out at around 500 per quarter. So far this year we have seen 493 deals in Q2 and 491 in Q1. We feel comfortable asserting that business confidence is at last returning to the markets.”
“At USD64m for Q2, average deal size is higher than it has been for five of the last eight years. The offshore region average is also higher than all other regions except for North America at USD119m and Central and South America at USD109m.”
“When we look at the contribution of the top 10 offshore deals to overall activity in Q2, we see that they accounted for just a third of the cumulative deal value overall, as they did in Q1. We believe that this gives further reason for optimism as values for past quarters have been distorted by one-off mega deals. We can now see genuine substance returning to the mid-market and activity returning across the spectrum of business sizes. Transaction sizes show signs of settling at pre-boom levels, on a par with 2006 data, when USD61m was spent on the average transaction.”
Cameron Adderley, Partner & Global Head of Appleby’s Corporate & Commercial department added: “When we look to gauge the relative strength of the offshore markets as compared to other major world regions, this quarter we find these numbers are encouraging. The offshore markets are now ranking sixth globally in terms of cumulative deal value, only just behind South and Central America. The offshore market is more active than Oceania, Africa and the Middle East and, when we look at average deal size, here again we find a source of positive news; the offshore region ranks third globally, behind only North America and South and Central America in Q2 2013.”
Global Offshore Market: Q2 2013
The key themes emerging from the report show that in the second quarter of 2013:
- There were 493 deals involving offshore targets completed with an aggregate value of USD31.6bn, putting the quarter slightly ahead of Q1 2013.
- The average offshore deal size was USD64m for Q1 2013, the same as for 2013 to date. If this is maintained or improved to the year end, deal sizes in 2013 would be greater than they have been in at least five of the last eight years.
- Acquisition activity led by companies incorporated offshore rebounded in Q2 2013 after a weaker first quarter, and there were 426 deals with a cumulative value of USD34bn, up 11% in terms of volume and 29% by value.
- In Q2, there were only three deals announced valued in excess of USD1bn. Instead, the majority of money was spent in the mid-market on transactions valued at between USD200-700m. We see this strengthening of the mid-market as a crucial step towards recovery.
- Finance and insurance deals continued to drive the offshore M&A markets at 168 deals with a combined value of USD10bn. This is up quite considerably on Q1 2013, when there were 147 deals in the sector worth USD6.5bn.
- The most popular deal type was the minority stake transaction, of which there were 295 that contributed USD11.5bn to the cumulative deal value for the quarter.
- Hong Kong acquirers spent the most money in Q2 2013, with an aggregate deal value of USD13.7bn that represented 40% of total spending by offshore acquirers.
- By average deal size, the offshore region ranks 3rd globally, behind North America and Central and South America in Q2 2013.
- Initial Public Offering activity is looking increasingly bullish, with both the volume and value of IPOs up considerably in Q2 2013 with 17 deals and a cumulative value of USD2.4bn.
- Q2 2013 was the best quarter since 2011 for IPOs and planned IPOs, with 39 deals in total worth USD4.1bn.
“These numbers are encouraging,“ says Nick Verardi, “the offshore market is showing signs of stability and the emergence of a new norm.“
Category: Finance & Business